TaxTMI 
TaxTMI 
2024 (10) TMI 1679
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....e firm name M/s. Jain Silver Palace. The assessee filed its return of income for the AY 2017-18 on 19.06.2017, declaring a total income of Rs.5,60,120/-. The case was selected for scrutiny under the Centralized Processing of Scrutiny Cases (CASS) due to large value cash deposits made during the demonetization period (09.11.2016 to 31.12.2016). During the assessment proceedings, the Assessing Officer (AO) issued several notices under Sections 143(2) and 142(1) of the Act, requiring the assessee to submit details regarding the source of the cash deposits amounting to Rs.55,00,000/- made during the demonetization period. The assessee responded that these cash deposits were the result of legitimate business receipts from cash sales made before demonetization. 2.1. The AO noted that the assessee's cash sales during the period 01.11.2016 to 08.11.2016 amounted to Rs.22.88 lakhs, which was disproportionately high compared to the regular monthly average of Rs. 2.5 lakhs to 3.5 lakhs. Similarly, for the period from 01.10.2016 to 31.10.2016, the assessee recorded cash sales of Rs.33.31 lakhs, which was also unusually high. The AO found this pattern to be inconsistent with the assessee's r....
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....noted that the assessee failed to furnish sufficient evidence, such as customer details, supporting documents for purchases, relevant VAT returns. The CIT(A) further observed that the sales trends provided by the assessee for the festive season did not justify the abnormally high cash sales during the relevant period. The CIT(A) confirmed the addition of Rs.55,00,000/- as unexplained money under Section 69A of the Act and dismissed the appeal. 4. Aggrieved by the CIT(A)'s order, the assessee has now filed the present appeal before us with following ground of appeal: 1. Whether, on facts and in circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition of Rs.55,00,000/- as unexplained money u/s 69A of the act? Further, appellant craves leave to add, amend, alter or withdraw all or any ground of appeal. 5. During the course of hearing before us, the Authorised Representative (AR) of the assessee reiterated the facts and stated that the assessee submitted entire cash book for the Financial Year (FY) 2016-17 to the AO which has not been doubted by the AO. The AR further stated that the along with details of tax audit report, the copies of ....
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....ank holiday. The assessee also highlighted that there were multiple reasons for holding higher cash during this period, including the festival season and the subsequent marriage season. Furthermore, they argued that merely holding higher cash for a short period should not lead to the conclusion that it was unaccounted. 5.4. We noted that the AO issued notices under Section 133(6) of the Act to various parties from whom the assessee claimed to have made purchases. Some parties did not respond, and the AO alleged that the purchases were not genuine. The assessee submitted contra-confirmation letters from several vendors, providing signatures and stamps of both parties to substantiate the genuineness of the transactions. Additionally, the assessee submitted itemwise daily stock details, which showed that the stock available during the relevant period was sufficient to support the sales made. The appellant argued that the AO did not dispute the stock records, and since both the stock and sales were verified, the cash deposits should not be treated as unexplained. 5.5. The AR contended that Section 69A was wrongly invoked since the cash deposits were recorded in their regular book....
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....that more than 90% of payments for purchases were made through banking channels and the VAT department accepted the returns without raising any queries. Importantly, the AO did not dispute the stock records, and no discrepancies were found in the books of account, which remained intact and were not rejected. - The AO invoked Section 69A of the Income Tax Act, claiming that the cash deposits represented unexplained money. However, the assessee contended that the cash deposits were duly recorded in the books of account and backed by legitimate sales, making the application of Section 69A inappropriate. It was emphasized that once the sales were recorded in the books and offered for tax, taxing the same under Section 69A of the Act would amount to double taxation. 8.1. The assessee relied on various judicial precedents, including Sobha Devi Dilipkumar vs. ITO, ACIT vs. Chandra Surana, ITO vs. J.K. Wood India (P.) Ltd., and ACIT vs. Hirapanna Jewellers. These decisions collectively emphasize that cash deposits during demonetization or otherwise, if duly recorded and substantiated, cannot be taxed under Section 69A unless the revenue demonstrates the unreliability of the boo....